After Finally Posting A 5% Pull-Back, Technical Analysts Are Focusing On This Key S&P 500 Level

After Finally Posting A 5% Pull-Back, Technical Analysts Are Focusing On This Key S&P 500 Level
Andrew Rummer

over 2 years ago1 min

Mentioned in story

After a mightily impressive run for US stocks, the S&P 500 finally succumbed to a 5% peak-to-trough pull-back on Thursday. 

Fueled by improving company earnings, plenty of government spending on COVID support packages, and ultra-easy central bank policy, the S&P 500 had gone an astounding 227 days without a 5% pull-back. That’s the seventh-longest streak on record and coincided with a 29% gain in the index. 

But all good things must come to an end. As the chart shows, the S&P 500 has now dropped through its 50-day and 100-day moving averages – key levels watched by technical analysts

Focus is now turning to the 200-day average at 4,135, some 4% below the index’s current price. Expect a fierce battle between bears and bulls if the S&P 500 does indeed decline to those levels. 

Plenty of traders use technical levels as prompts for where to insert their buy or sell orders into the market. A Bloomberg report on Thursday, for example, said one large investor paid $94 million for a massive options trade that starts paying off when the S&P 500 drops below that 4,135 level. 

With futures on the S&P 500 down another 0.5% as of 6:10am in New York on Friday, we could be in for a tough end to the week. 

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